GSK hikes stake in India arm to 73%

MUMBAI: British drug giant GlaxoSmithKline plc (GSK) has increased its stake in GlaxoSmithKline Consumer Healthcare, its publicly-listed consumer healthcare subsidiary in India, from 43.2% to 72.5% in a transaction valued at Rs 4,800 crore.

This follows the voluntary open offer undertaken by its subsidiary, GlaxoSmithKline Pte., in a move to increase the parent company's exposure to emerging markets such as India. During the offer period, which commenced on January 17, 2013 and closed on January 30, 2013, shareholders of GlaxoSmithKline Consumer Healthcare tendered 12,319,749 shares representing 29.3% of the total shares outstanding. The offer of Rs 3,900 per share values the transaction at approximately euro 568 million (based on prevailing foreign exchange rates).

"We are very pleased with the outcome of this transaction, which will further increase our exposure to a key emerging market. It is a significant vote of confidence in the long-term growth prospects of our Consumer Healthcare business in India," David Redfern, chief strategy officer, GSK, said in a statement. Redfern had earlier stated that this transaction represents a further step in GSK's strategy to invest in the world's fastest growing markets. Shares of GlaxoSmithKline Consumer Healthcare were down about 2% or Rs 82.50 on the BSE on Tuesday to close at Rs 3,730.

The company said the final payment for shares tendered and accepted will be completed on or before February 13, 2013, at which point GlaxoSmithKline Pte. would acquire full beneficial ownership of the shares tendered in the open offer. The open offer was first announced on November 26, 2012 and is being managed by HSBC Securities and Capital Markets (India).

GSK is one of the world's leading research-based pharmaceutical and healthcare companies. The Indian business generated over Rs 2,800 crore turnover in the financial year ended December 31, 2011, with a compound annual growth rate ( CAGR) over the past five years of 19%.

Besides Horlicks and Boost, which are growing at a healthy pace, the company also manufactures and markets Viva and Maltova apart from other brands in diverse categories such as Eno, Crocin, Iodex, BreatheRight and Sensodyne.

GSK had made its intent clear that the Indian subsidiary would continue to remain listed on the bourses. Securities regulations in India require a minimum public shareholding of 25% for a company to maintain a public listing in the country.

In the last decade, companies such as Reckitt Benckiser (2003), Cadbury India (2003), Otis Elevator Company (2003), Kodak (2003), Philips (2004), Carrier Aircon (2005), Panasonic (2007) and Ray BanSun Optics (2008) have delisted their shares from the Indian bourses.